As the first quarter of 2018 comes to a close, transportation capacity remains a hot topic. The logistics industry is experiencing what is being considered “the perfect storm” as factors such as the economy, electronic logging devices (ELDs), and driver shortages continue to tighten transportation capacity. However, evaluating each factor could uncover additional opportunities for shippers to run efficiently.1
Forecasting Capacity With The Economy
The outlook for the U.S. economy continues to be positive for the near future. With nearly 70 percent of economic data focusing solely on consumer spending, and the National Retail Federation expecting 2018 retail sales to increase by upwards of 4.4 percent2, consumer purchasing behavior can be a solid indicator for transportation capacity. A positive economic forecast could imply an increasing demand for the movement of goods and capacity needed to move those goods. To meet current and future demand, third party logistics professionals could be utilized to obtain and secure capacity.
Electronic Logging Devices (ELD) Mandate Influences The Market
The ELD mandate is another factor impacting the transportation market. This past December, ELDs were expected to be implemented in trucks across the United States. Although official enforcement does not begin until April 1, 2018, the mandate has already had an influence on capacity by putting higher priority on transit times and fully utilizing hours of service.3 The Journal of Commerce (JOC) recently reported that longer routes with tight delivery windows have been harder to book, as drivers have to be more strategic in how their hours of service are spent.4 To address these changes, collaboration between shippers and carriers to improve network design and routing could help improve productivity and reduce delays.
The Driver Shortage Dilemma
The shortage of qualified drivers has been a challenge throughout the trucking industry for the past 15 years.5 In the current environment, there are twelve loads that need to be shipped for every truck and driver.6 If these trends continue, the industry could be short of 174,000 drivers by 2026.7 Without the appropriate number of drivers, diminished capacity leads to delayed shipments and a more competitive transportation and recruiting market. To operate efficiently, shippers can rely on their logistics partners to continue to recruit and retain drivers. Diversifying transportation modes can also help shippers efficiently operate while the driver shortage remains a challenge.
Aside from addressing the current state of capacity, diversifying modes of transportation could help reduce the risk of disruption caused by the need for additional capacity in the wake of surges or weather-related circumstances. A dedicated fleet could be an optimal solution to implement that offers consistent capacity. Aside from dedicated fleets, an integrated 3PL could also provide additional methods of transportation such as intermodal and brokerage.
Although the industry may be in the midst of a “perfect storm,” shippers can take a look at the factors impacting capacity and look for opportunities to keep their freight moving. As factors like the driver shortage, ELDs, and the economy evolve, so will the available capacity within the market. Planning ahead and strategizing with logistics partners can make supply chains more agile as the market changes.